The FCA said cryptocurrency derivatives could be classed as financial instruments under the EU's Markets in Financial Instruments Directive II (MIFID II), and highlighted activities that firms may engage in that could bring them within the scope of the regulatory regime. This is despite the fact that cryptocurrencies themselves fall outside of the scope of regulation.

"It is likely that dealing in, arranging transactions in, advising on or providing other services that amount to regulated activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorisation by the FCA," the FCA said.

Cryptocurrency futures involve an agreement to exchange cryptocurrency at a set price on a future date.

Cryptocurrency CFDs are where parties agree to an exchange of cryptocurrency where the value exchanged is determined by the difference in price of the assets at the termination of the contract compared to the outset.

Cryptocurrency options are "a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies", the FCA said.

"It is firms’ responsibility to ensure that they have the appropriate authorisation and permission to carry on regulated activity," the FCA said. "If your firm is not authorised by the FCA and is offering products or services requiring authorisation it is a criminal offence. Authorised firms offering these products without the appropriate permission may be subject to enforcement action."

Weekly Newsletter

Expertise in Financial Regulation

Pinsent Masons offers an experienced team who are adept at advising on the increasingly international and complex questions arising out of the current sea of regulatory change. The current climate dictates that lawyers have an ability to provide clear, practical advice delivered in a cost-effective manner.